International Seaways Q4 Earnings Call Highlights

INSW

Key Points

• International Seaways reported Q4 net income of $128 million ($2.56/share) and adjusted EBITDA of $175 million, and raised its quarterly dividend to a record $2.15 per share, marking an 87% payout ratio and bringing total shareholder returns since 2020 to over $1 billion (with a $50 million buyback program still authorized).

• The company is buying the remaining 50% of Tankers International and expanding the pool to Suezmaxes while renewing its fleet—taking delivery of the Seaways Gibbs Hill ($119 million) and selling older tonnage (10 vessels for $131 million plus seven more for $216 million)—with four LR1 newbuilds due in 2026 that are largely fully financed.

• Balance-sheet and market positioning remain strong: total liquidity of about $724 million (including ~$170M cash and ~$560M undrawn revolver), gross debt of $578 million with net LTV below 13% and debt 100% fixed/hedged, while management cites constructive tanker fundamentals and early Q1 2026 spot TCEs of about $50,900/day (71% booked) versus a breakeven near $14,800/day.

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International Seaways (NYSE:INSW) reported fourth-quarter 2025 net income of $128 million, or $2.56 per diluted share, as the tanker owner pointed to strong market conditions and continued cash returns to shareholders. Excluding special items, the company posted adjusted net income of $122 million, or $2.45 per diluted share, with adjusted EBITDA of $175 million, according to remarks on the company’s earnings call.

Dividend raised to a record level as shareholder returns pass $1 billion

Management highlighted a new quarterly dividend totaling $2.15 per share, described as the company’s largest-ever quarterly payout, scheduled for payment in March. Chief Executive Officer Lois Zabrocky said the dividend represents an 87% payout ratio of fourth-quarter adjusted net income and marks the sixth consecutive quarter with a payout ratio of at least 75%.

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Following the March payment, Zabrocky said International Seaways will have returned more than $1 billion to shareholders since 2020. The company also continues to have a $50 million share repurchase program authorized through the end of 2026, which management said remains an option alongside its dividend framework.

Fleet renewal and Tankers International consolidation

International Seaways discussed several fleet and commercial initiatives, including the consolidation of Tankers International, which management described as the leading VLCC pool. The company said it is acquiring the remaining 50% interest in Tankers International and expanding the platform to include Suezmax vessels.

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As part of its renewal efforts, the company took delivery of the Seaways Gibbs Hill, a 2020-built, scrubber-fitted VLCC, at the end of December, and placed it into Tankers International. Zabrocky said International Seaways paid $119 million for the vessel after disposing of 10 older vessels averaging 18 years of age for $131 million in proceeds. The company added that it has continued to sell older tonnage in early 2026, completing seven additional vessel sales for $216 million in proceeds.

Management reiterated that the company’s remaining four LR1 newbuildings are expected to deliver in 2026, finishing a newbuild program that it said is fully financed. Zabrocky said only about $30 million of company cash is needed to take delivery of those vessels, which was cited as one factor supporting the elevated dividend.

Balance sheet positioning and free cash flow

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On liquidity, Zabrocky said the company ended the period with $724 million in total liquidity, including nearly $170 million in cash and roughly $560 million of undrawn revolver capacity. She also pointed to a net loan-to-value below 13% and a spot cash break-even rate under $15,000 per day.

Chief Financial Officer Jeff Pribor provided additional detail, stating the company generated roughly $135 million of free cash flow in the fourth quarter under its definition, driven by adjusted EBITDA of $175 million and offset by debt service and dry-dock/capital expenditures. During the quarter, International Seaways received $36 million in vessel sale proceeds and paid the remaining $107 million toward the Seaways Gibbs Hill purchase, along with about $6 million of LR1 installment payments net of financing.

Pribor said International Seaways repaid $258 million of sale-leasebacks on six VLCCs, using proceeds from a previously issued $250 million bond that unencumbered six VLCCs and lowered the company’s cost of debt. The quarter also included a $0.86 per share dividend paid in December (about $42 million). After these actions, management said cash declined by $261 million to an ending balance of about $167 million, with undrawn revolvers of $557 million.

Pribor added that gross debt at the end of 2025 was $578 million, mandatory repayments through the end of 2026 total about $30 million, and the company’s debt is 100% fixed or hedged, contributing to a cost of debt below 6%. He said the nearest maturity is not until the next decade, and the company has 31 unencumbered vessels.

Market outlook: demand, geopolitics, sanctions, and supply constraints

Management characterized tanker demand fundamentals as constructive, pointing to oil demand growth projections of more than 1 million barrels per day for both 2026 and 2027. Zabrocky said OPEC+ is supplementing non-OPEC production increases by unwinding prior cuts, while the geopolitical backdrop remains a key driver of trading patterns and volatility.

She cited elevated U.S.-Iran tensions, the unresolved Russia-Ukraine conflict, and developments involving Venezuela as contributing to what she called continued “geopolitical intensity” for tankers. Zabrocky also said the company saw “a substantial amount of oil on the water” during the fourth quarter that it believed included sanctioned barrels.

On the supply side, management emphasized the impact of sanctions enforcement and a limited order book when considering potential removals from the compliant trade. Zabrocky argued that even with about 15% of the fleet on order, the number of “removal candidates” for compliant trading is multiple times the vessels on order, supporting what she called a likely continued upcycle over the next few years.

Early first-quarter 2026 trading and commercial commentary

International Seaways provided an update on first-quarter 2026 performance, with Pribor stating the company had a blended average spot TCE of approximately $50,900 per day booked at 71% of expected first-quarter revenue days. The company’s expected 2026 breakeven rate was cited at about $14,800 per day.

In Q&A, Chief Commercial Officer Derek Solon discussed strength in the MR product tanker market, attributing it in part to shifts in refined product flows into Europe. Solon said reduced refined product coming from India and Turkey—linked to Russian crude refining—has increased Atlantic Basin flows, including U.S. Gulf exports to Europe, benefiting MRs. He also cited weather-related delays that reduced vessel utilization and tightened supply.

On chartering strategy, Zabrocky said the company remains open to layering in time charters but plans to be “judicious,” emphasizing the desire to maintain exposure to a strong spot market. On VLCC time charters with profit-sharing elements, Solon explained that three Shell VLCCs have a base rate plus a market-linked element, and profits above the base are split 50/50 with the charterer, with no cap on the upside.

Asked about additional lease repurchase options, Pribor said the company has flexibility on remaining lease-structured debt but does not expect to exercise those options in the near term, arguing the balance sheet is positioned where management wants it and supports flexibility for shareholder returns.

In another exchange, Zabrocky said increased consolidation among legitimate VLCC owners is a positive development in a fragmented market, and she pointed to a large number of VLCCs on an OFAC sanctions list as a structural factor shaping supply availability for compliant trade.

About International Seaways (NYSE:INSW)

International Seaways, Inc (NYSE: INSW) is an independent tanker company that provides seaborne transportation services to oil companies, commodity traders and national oil companies. The firm’s operations focus on the carriage of crude oil and refined petroleum products, offering both time­ charter and voyage­ charter arrangements. With a modern fleet of very large crude carriers (VLCCs), Suezmax and Aframax tankers, as well as medium range (MR) and Handy product tankers, International Seaways supports global energy supply chains across major trade routes.

Founded in 1997 as Diamond S Shipping, the company completed its initial public offering in the late 1990s and rebranded to International Seaways in September 2018.

The article "International Seaways Q4 Earnings Call Highlights" was originally published by MarketBeat.